Fiscal health prescription boosts chances of India rating upgrade

As the fine print of the budget sinks in, one thing can be said for sure: The big picture painted by Finance minister Nirmala Sitharaman is that of promise, confidence, participation and commitment towards economic growth aimed at social equity. The first budget of the Narendra Modi 3.0 government was tabled in the parliament amidst heightened expectations. The bold budget focusses on unleashing the entrepreneurial spirit, introducing big-bang moves to leverage India's favourable demography into a dividend that would play a pivotal in economic growth. Though the budget does not provide giveaways, it remains highly people-centric. The FM and her team took advantage of stable macro fundamentals such as robust tax collections in the fiscal 2023-24 and expectation of a similar trend in the current financial year, along with a handsome dividend of over ₹2 lakh crore from the RBI to keep the fiscal deficit at 4.9% of the GDP this year.

The glide path talks of bringing it further down to 4.5% in 2025-26, lending credibility of a stable balance sheet for global and domestic stakeholders, including rating agencies. A big deliverable of this move could be in the form of an India rating upgrade.

One of the major highlights of this budget is its focus on job creation. In fact, the setting was visible in the Economic Survey. The survey made it clear that we need to add about 7.9 million jobs every year at least till 2030 in the non-farm sector. The budget makes the decisive move by unveiling an ambitious internship scheme that would make over 40 million people skilled and employable with the government spending over ₹2 lakh crore in the next five years. Job creation not only leads to higher national income, it is a key catalyst of social equity and sustainable growth.


Of course, the responsibility has been cast on the private sector to skill our youth and create more jobs. We all look forward to more jobs coming up as the manufacturing segment starts gaining traction from domestic and global investors who will focus on catering to the Indian and global markets.

The startup ecosystem and MSMEs have also received a helping hand from the government through the abolition of the angel tax and more credit being made available to small entrepreneurs. The angel tax was a sore spot for investors funding startups, with promoters spending considerable time on tax issues rather than core business ideas. The move has been welcomed alike by all promoters and investors. Similarly, the simplification of various taxes will ease the burden on industry and continue the efforts being made to reduce the cost of doing business in India.

The bold budget provides continuity with a positive change for harnessing growth across all sectors of the economy.